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Stocks May Regain Ground Following Recent Sell-Off - U.S. Commentary

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Stocks are likely to move to the upside in early trading on Tuesday following the sell-off seen over the course of the previous session. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 158 points.

Bargain hunting is likely to contribute to initial strength on Wall Street, with traders picking up stocks at reduced levels on the heels of the sharp drops seen Friday and Monday.

The pullback seen yesterday afternoon pulled the Dow down to its lowest closing level in over eight months, while the Nasdaq and the S&P 500 dropped to their lowest closing levels in over a year.

Trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to raise interest rates by a quarter point, although traders are likely to closely scrutinize the central bank's accompanying statement and forecasts for clues about future rate hikes.

On the U.S. economic front, the Commerce Department released a report showing a substantial increase in U.S. housing starts in the month of November.

The Commerce Department said housing starts jumped by 3.2 percent to an annual rate of 1.256 million in November from the revised October estimate of 1.217 million.

Economists had expected housing starts to edge down to a rate of 1.225 million from the 1.228 million originally reported for the previous month.

The report also said building permits surged up by 5.0 percent to an annual rate of 1.328 million in November from the revised October rate of 1.265 million.

Building permits, an indicator of future housing demand, had been expected to dip to a rate of 1.259 million from the 1.263 million originally reported for October.

Stocks showed wild swings over the course of the trading session on Monday before ending the day substantially lower. With the sell-off on the day, the Dow fell to its lowest closing level in over eight months, while the Nasdaq and the S&P 500 dropped to their lowest closing levels in over a year.

The major averages climbed off their lows of the session going into the close but remained firmly negative. The Dow plummeted 507.53 points or 2.1 percent to 23,592.98, the Nasdaq tumbled 156.93 points or 2.3 percent to 6,753.73 and the S&P 500 plunged 54.01 points or 2.1 percent to 2,545.94.

In overseas trading, stock markets across the Asia-Pacific region moved significantly lower during trading on Tuesday. Japan's Nikkei 225 Index nosedived by 1.8 percent, while Hong Kong's Hang Seng Index slumped by 1.1 percent.

Meanwhile, the major European markets are turning in a mixed performance n the day. While the German DAX Index has risen by 0.4 percent, the French CAC 40 Index is down by 0.1 percent and the U.K.'s FTSE 100 Index is down by 0.4 percent.

In commodities trading, crude oil futures are tumbling $1.32 to $48.56 barrel after slumping $1.32 to $49.88 a barrel on Monday. Meanwhile, after jumping $10.40 to $1,251.80 ounce in the previous session, gold futures are slipping $0.40 to $1,251.40 an ounce.

On the currency front, the U.S. dollar is trading at 112.41 yen compared to the 112.83 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1379 compared to yesterday's $1.1348.

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